Tlar: I know this is off topic, but I have been IM'd this question a few times. I've removed the name of the person who IM'd me but feel this is a really good question. Anything I say is only my opinion.

" hope you don't mind answering a question that comes up for me from time to time. If the dinar is going to become an "asset based" currency, how are they going to deal with all the trillions of dinar outside the country?

I am under the impression that they want the total dinar in circulation to go from 30 trillion to 30 billion. If so, what happens to so called investors 1 to 2 trillion dinar?

I understand that supposedly it will become a "hard currency" of central banks, but it still would count toward the total dinar in circulation, would it not? I mean at some point some central bank is going to want to cash in. I am confused. Thank you for your help"

First here is a reason ally simple definition of "money" and allows us to look at specifics of money and fractional banking which is important to your question IMO....Read More Link On Right

Type of money M0 MB M1 M2 M3 MZM Notes and coins in circulation (outside Federal Reserve Banks and the vaults of depository institutions) (currency) ✓[8] ✓ ✓ ✓ ✓ ✓ Notes and coins in bank vaults (Vault Cash) ✓ Federal Reserve Bank credit (required reserves and excess reserves not physically present in banks) ✓ Traveler's checks of non-bank issuers ✓ ✓ ✓ ✓ Demand deposits ✓ ✓ ✓ ✓ Other checkable deposits (OCDs), which consist primarily of Negotiable Order of Withdrawal (NOW) accounts at depository institutions and credit union share draft accounts. ✓[9] ✓ ✓ ✓ Savings deposits ✓ ✓ ✓ Time deposits less than $100,000 and money-market deposit accounts for individuals ✓ ✓ Large time deposits, institutional money market funds, short-term repurchase and other larger liquid assets[10] ✓ All money market funds ✓M0: In some countries, such as the United Kingdom, M0 includes bank reserves, so M0 is referred to as the monetary base, or narrow money.[11]MB: is referred to as the monetary base or total currency.[8] This is the base from which other forms of money (like checking deposits, listed below) are created and is traditionally the most liquid measure of the money supply.[12]M1: Bank reserves are not included in M1.M2: Represents M1 and "close substitutes" for M1.[13] M2 is a broader classification of money than M1. M2 is a key economic indicator used to forecast inflation.[14]M3: M2 plus large and long-term deposits. Since 2006, M3 is no longer tracked by the US central bank.[15] However, there are still estimates produced by various private institutions.MZM: Money with zero maturity. It measures the supply of financial assets redeemable at par on demand. Velocity of MZM is historically a relatively accurate predictor of inflation.[16][17][18] The ratio of a pair of these measures, most often M2 / M0, is called an (actual, empirical) money multiplier. ___________________________________________________________________ Fractional-reserve banking[edit] Main article: Fractional-reserve banking The different forms of money in government money supply statistics arise from the practice of fractional-reserve banking. Whenever a bank gives out a loan in a fractional-reserve banking system, a new sum of money is created.

This new type of money is what makes up the non-M0 components in the M1-M3 statistics. In short, there are two types of money in a fractional-reserve banking system:[19][20] 1.central bank money (obligations of a central bank, including currency and central bank depository accounts) 2.commercial bank money (obligations of commercial banks, including checking accounts and savings accounts) In the money supply statistics, central bank money is MB while the commercial bank money is divided up into the M1-M3 components. Generally, the types of commercial bank money that tend to be valued at lower amounts are classified in the narrow category of M1 while the types of commercial bank money that tend to exist in larger amounts are categorized in M2 and M3, with M3 having the largest. In the US, reserves consist of money in Federal Reserve accounts and US currency held by banks (also known as "vault cash").[21] Currency and money in Fed accounts are interchangeable (both are obligations of the Fed.) Reserves may come from any source, including the federal funds market, deposits by the public, and borrowing from the Fed itself.[22] A reserve requirement is a ratio a bank must maintain between deposits and reserves.[23] Reserve requirements do not apply to the amount of money a bank may lend out. The ratio that applies to bank lending is its capital requirement.[24 _____________________________________________________________________ OK by now you should be completely confused because of the above Wikipedia definitions. Don't be confused. These are just ways to measure quantitatively deferent types of actions as they happen within an economy much as you might look at object from all sides. The measure we would want to look at to find a solution to you question is M1 and M2. Lets take a closer look at these to measurement tools: M1: Bank reserves are not included in M1. M2: Represents M1 and "close substitutes" for M1.[13] M2 is a broader classification of money than M1. M2 is a key economic indicator used to forecast inflation. Notice that bank reserves are not included in M1 and M2 and that M2 is the predominate measure of inflation for a country like Iraq. Reserves either in country or reserves outside of the country are not included in this number. According to Saleh he stated last year before the CBI began buying and retiring trillions of dinar, there were only 4 trillion dinar "circulating" in Iraq. The key word here is circulating. We also know Iran and Syria would be considered circulating the dinar because they had accepted it as a viable currency. We might assume that of these 3 countries, Iran, Iraq and Syria, that Iraq would undoubtedly have more dinars than the other two because the dinar has its country of origin in Iraq and is used in day to day transactions where as the other two used it to predominately trade with Iraq. From this I think we can safely assume that Syria and Iran at their height last year had less than 4 trillion each. Probably closer to a fourth or third. Back to you question. Of the 30 trillion dinar that was let out of the CBI that is out of country, most resides now in the hands of Central Bank reserves around the world and is in the hands of speculators like you and I. You and I will sell our dinars to these same banks and they too will become part of the reserves of that country. By definition these funds are not considered circulating funds. There is no velocity to them as they sit idle in our hands. They don't buy anything and we virtually don't ever sell them. When we do sell, they will ultimately be dormant as an asset and will be used to prop up other currencies like the dollar. None the less they will most likely remain as numbers on a computer only and will not "circulate." Now lets attempt to answer the question. The question of how many physical dinars are left circulating requires a best guesstimate and depends a lot on how many dinars they have purchased and retired. Most of what is considered dinar in Iraq will be converted by simple equation. These dinar do not really exist in the sense of physical dinar but can be found on notes, loans deposits, budgets, debts, balance of payments still owed, and on and on. They most likely represent the bulk of what would be considered as part of Ml. They will just change from a higher number to a lower number as they are re-done based on a new exchange rate be it a slow move (free float from 1166) or an immediate change in currency value. Consider this the known category. To us the unknown category is the physical currency itself. This is why I'm chasing how much dinar they have retired since 2012. This will give us some additional incite as to where they are on dollarization, that is if we make some basic assumptions. The first we know as fact. When they started dollarization, Iraq had 4 trillion dinars circulating in country. The second fact I will be seeking is the amount of trade that Iraq di with Syria and Iran since the end of 2010. This will be the sum total of exports from these two countries to Iraq. If we know how much Iran and Syria sold to Iraq since 2010 and we know how many dinars the CBI has bought and retired and we know that 4 trillion of it was from Iraq, that leaves the balance from these two rouge countries exposed for us to guessitimate. From that number we can determine pretty close as to when Iraq will achieve dollarization in these countries as well as Iraq based on Iraq's current burn rate. Carrello is computing the buy of dinars. I'm sorry to dance around you question but the answer you seek is simple in my mind. Iraq will do a change in their currency. It will affect two categories. The physical currency and the paper currency such as instruments of debt.

Their goal is to hopefully end up with 25 to 30 billion from 33 trillion. This is all being done in country and it is a balancing act. The money goes up, the instruments of debt will go down to adjust to the money going up. Physical cash as we see is being taken care of daily before hand through dollarization. If they go to a dollar in value and everyone is holding dollars in Iraq, this will be a simple thing to do. If everyone were to be still holding dinars at 1166 to a dollar, the debt ratio would not work for Iraq. At some point they will say "close enough" and change the currency and exchange rate. When they change the exchange rate you will sell at the new level. This will not be considered in this scenario because your cash is a non circulating dinar.

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